Plenty of current accounts offer a mobile service, but in most cases banks have simply tacked an app onto their existing, creaking infrastructure.
The latest challenger on the scene, Monzo, threatens to shake up the market with its working prototype of an altogether smarter type of bank account.
What’s the deal?
Monzo has received an interim banking licence from the Bank of England, and expects to get its full licence within the full six months. However, an (almost) fully working version of the account is available for any Apple or Android smartphone user who wants to sign up by downloading the free app and getting a free prepaid direct debit card, though you’ll need to load at least £100 onto it.
You can use the card for contactless and chip and pin payments and online purchases. The card has a wealth of features aimed to make your money safer, and easier to follow.
Why should I care?
Based on my use of the account so far, Monzo makes tracking your spending far easier than a normal bank account. At any point you can check your live balance, and you get message notifications telling you what you’ve spent and when. This can be used to analyse where your money is going, and also to give you an instant alert if something suspicious happens.
It’s also got some really smart security features, using geo-tagging information from your phone to cut out fraudulent activity before it happens. If Monzo detects your phone is in London, for example, but you’re trying to withdraw cash from Eastern Europe, it won’t let you. Similarly, if you head abroad you shouldn’t need to warn it as it’ll automatically update via the app. Incidentally, there’s no fees to use the card abroad either.
One of the most striking and simplest security features is visible as soon as you get the card – it doesn’t have your name on it. When you think about it, that’s a great idea. You know your name, but any would-be fraudster that finds your card will struggle to use it online without that key information.
And if you lose your card, the app lets you “freeze” transactions, giving you a chance to look for it without the fear that a fraudster is running down your balance.
What’s the catch?
Monzo isn’t yet a “full” bank, as it’s in the final stages of approval from the regulator. This means your prepaid card can’t be used to pay other people or set up direct debits yet, though both those features should arrive soon.
Until the full licence arrives, your money also won’t be protected by the Financial Services Compensation Scheme either, so if Monzo were to go bust, your money wouldn’t be protected. For now, that means if you want to give it ago, you’ll be using the card more like a digital wallet than a normal current account – and it’s best not to load up too much cash until the bank gets its licence
What are my other options?
Atom Bank and Starling Bank are the other companies vying for the “first mobile bank” status. Starling doesn’t yet offer any services, but if you’re interest you can sign up for the waiting list to test the product. Atom is live and kicking, but for now it’s only offering savings accounts.
Many banks and building societies also offer their own mobile apps, many of which have improved substantially over the last couple years.
Where can I find out more?